City of London Elections 2013: the battle, the count, the lessons

The
recent elections to the City of London’s local authority were fiercely fought,
after years where the majority of seats went uncontested. Lessons should be
drawn for any future attempt to reform the financial services industry.

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Elections
for the City of London Corporation’s Common Council were for many years
politics-free events in which a narrowly drawn electorate voted for a narrow
range of candidates. As often as not, sitting councillors stood for re-election
in seats that were uncontested. Debate about the sort of organisation the
Corporation should be did not take place.

The
election on the 23rd March of this year was different. It involved
public debates about the Corporation’s future and a genuine choice of
candidates in 21 of the City’s 25 wards. The City Reform Group, of which I am a member, encouraged
and supported independent, reform-minded candidates to stand and 10 did so.
(See my last article for OurKingdom, in the run-up to the elections.) Those candidates presented programmes of
reform that were couched in distinctly City-friendly tones, calling for
transparency in the manner in which the Corporation spends its money and makes
its decisions, advanced new proposals for how it could better deploy its
considerable resources (for example, by ploughing money into the City’s police
force in order that it may become a serious player in the fight against
financial crime) and how it may act as leader in building a culture of professionalism
in the financial services industry.

Unusually,
since Corporation elections are generally non-party political, the Labour Party
also fielded 10 candidates. The Labour manifesto involved similar commitments
to reform as those candidates who were supported by the City Reform Group.
However, the Labour party pledged a wider range of commitments, including
making the Corporation a living wage employer and using its clout to persuade City employers to do likewise. Labour candidates stood in wards in which
independent reform-committed candidates did not stand in order to ensure that
in as many wards as possible the voters had a candidate who stood for reform of
the Corporation.

The
voters, having been given a genuine choice they came down emphatically, in
favour of the status quo. Only two independent reform candidates were elected.
None of Labour’s candidates were, although several performed well and one
came within a handful of votes of doing so. The winner of the election was
indisputably the Corporation itself. (See the results here.)

One
must approach with particular caution the results of an election in which the
votes even for successful candidates were in the hundreds and not the thousands.
However, it provides a glimpse of the attitudes and approaches that will feature
in politics of the financial services industry in the coming years.

The
City voters

The
Corporation’s electorate is unrepresentative of London and the UK population,
but is peculiarly representative of the City itself. It consists of those with
property interests within the City and those who have been allocated a vote by
corporations who are provided with a number of votes to distribute internally.
This franchise means that whilst some of the electorate were small business
owners and some were residents, the majority were those who worked within the
financial services industry.

The
votes for Labour party and independent reform candidates show that the industry
does not vote as a monolithic block. But the rejection of reform candidates in
the vast majority of seats is significant.

Those
who stood for reform offered the mildest recipe for change. They advanced no
critique of capitalism, or even of the version of capitalism which successive
governments have advanced over the last 30 years. They did not seek to
challenge the assumption that here was an industry that should be prized and
supported or that the Corporation was the body to provide industry-wide
leadership. What they did stand for was an acknowledgment that something had
gone very significantly wrong with the way in which many parts of the financial
services industry operated and that the Corporation, which is effectively the
bridgehead between the financial services industry and the state (the term
‘lobbyist’ does not quite capture the entrenched nature of its influence), was
part of the problem.

The
election was therefore an opportunity for the City to demonstrate a willingness
to acknowledge wrong and commit itself to reform by voting for change within
its own representative body.

The City’s commitment to reforming itself has been much trumpeted by the
Corporation and other industry leaders to ward off the threat of external
regulation (most recently in its submission to the Parliamentary Commission on
Banking Standards in which it opposed any additional regulation of the banking
industry).
If one thing emerges from this election it is that for all those claims, when
the City is faced with the test of voting for reform, then in the privacy of
the voting booth, the City chose the status quo. When one comes to consider how
far the City can be trusted to puts its house in order, this fact deserves to
be better known.

The
reformers

Although
the launch of the City Reform Group was respectfully reported by the
broadsheets the election itself was (aside from the coverage by the Financial
Times) covered poorly even by the Evening Standard, London’s daily paper.

This
may say something about the commitment of that paper to provide serious
coverage of important London events and perhaps also about its own pro-City bias.
However, even the most right wing news outlet finds it difficult to ignore the
news on its doorstep. Perhaps the greatest success of Occupy the London Stock
exchange was to occupy the front pages of Britain’s daily papers: the tents in
front of St Pauls may have brought the press, but they stayed because the
occupation created a sense that the terms of debate had been thrown open: the
big issues need not, indeed could not, be left to the political class to debate
and decide.

Former occupiers
were involved in the City Reform Group but by the time of the Corporation
election that radical, reforming spirit had thinned into a genteel,
establishment call for moral improvement. Led by Church of England clergymen,
supported senior figures in the RSA and WHICH and by conservative MP David
Davis, the reform group did not offer a challenge to existing system but a plea
for the creation of institutional morality need to make the system work.

It is
an agenda of ‘moderate’ reform, centred on professionalization of the industry
and ring fencing rather than separation of the deposit-taking and investment
arms of the banks, to which the Labour and Conservative parties has already committed
themselves and to which the Parliamentary Commission on Banking Standards has
added its voice.

The
fact that the Labour Party, which once pledged to abolish the Corporation, now
participates in Corporation elections as a candid friend of the financial
services industry (‘to bring about the reforms needed to create again a City
and Corporation of which we can all be proud’, as the City of London Labour
Party website has it, is a
small but telling signal that it will not be the party to ‘take on the City’ in
the way that the Thatcher government took on the unions. It may institute codes
of conduct and greater training requirements, plead for responsibility and
issue threats of real change if impossibly vague criteria are not met (Labour
currently pledge to break up the banks ‘if there is not a genuine change of
culture’ in the City. The
City has responded and will continue to respond much as certain trade unions
responded to calls for restraint and responsibility in 1970s, by issuing solemn
declarations that in practice count for little.

Those
who took part in the Corporation election trod a difficult path: they had to be
moderate and un-newsworthy in order to have any chance of being elected. Yet it
is hard not to see the election as one example of the reform of the financial
services industry being re-occupied by the political class, denuded of it
radical potential and fading into the foreground of politics-as-usual. ‘Make no little plans’, said architect
Daniel Burnham ‘for they have no magic to stir men’s blood.’ It is a warning
which City reformers need to heed.

The
future reform of the Corporation and the industry

One of
the odd advantages enjoyed by the Corporation is that, despite its own
self-proclaimed role as the ‘voice’ of the financial services industry, many
people persist in regarding it as a harmless, historic local government body. However,
this attitude may be changing. The pressure for the Corporation to release
information about its private income led it to make disclosures in the lead up
to the election. The ‘City’s Cash Overview 2012’ which revealed a fund worth
£1.32bn was not a full breakdown of expenditure and pressure must continue to
understand how it uses its money to advance the interests of the financial
services industry. In March the online campaigning organisation Avaaz started a
petition that called for the ‘Rememberancer’, the Corporation official who
represents the City’s interest in Parliament, to be removed from his traditional
seat in the Chamber of the House of Commons.

Understanding
and exposing the role that the Corporation plays in shaping the life of London
and the nation is important. However, the Corporation - its institutions,
history and public spaces - should also be used to fire the widest debate about
the future of the financial services industry, which is a debate about what sort
of economy and society we want.

2015
will mark the 800th anniversary of Magna Carta, the medieval charter
in which the British crown not only undertook to respect traditional liberties
but also to respect the freedom of the trading City of London. This freedom has
been the source of the wealth and power of the financial services industry. The
Magna Carta anniversary is an opportunity to think again
about the terms of the licence which the City enjoys: to consider what society
requires of the financial services industry in return for the right to make its
profits.